Buying locally boosts economy

Buying locally boosts economy

October 2nd, 2011 by Carey O'Neil in Business Around the Region

Red and icicle radishes are for sale at the Circle S. Farms booth at the Main Street Farmers Market in Chattanooga. Circle S. is owned by the husband-and-wife team of Letty and Curtis Smith.

Photo by Alex Washburn /Times Free Press.

Chattanooga's "Foodshed"

49,000 - Number of farms within 100 miles of Chattanooga

117 - Average number of acres in typical Chattanooga farm

85 - Percentage of farms with sales under $25,000 in the Chattanooga area

$3.5 billion - Value of farm products in the Chattanooga area

$10.6 million - Amount of food grown by local farmers sold directly to consumers

Source: USDA, Appalachian Sustainable Agriculture Project.

For community-oriented programs, farmers markets have a hard time reaching much of the community.

Only a fraction of the Chattanooga area's food sales go to local farmers peddling their peppers and potatoes. If Chattanoogans spent just 5 percent more of their food budget -- about one meal a week -- to buy food directly from local farmers, more than $100 million would be injected back into the local economy every year, according to an Ochs Center study commissioned by Chattanooga-area food promoters Gaining Ground.

"That's serious economic development, and it's not asking anybody to do anything that they don't already do," said Jeff Pfitzer, director of Gaining Ground. "We're just asking to change habits."

Gaining Ground is a program supported by a three-year, $1.65 million grant from the Benwood Foundation looking for ways to support community farms.

The farms within 100 miles of Chattanooga sold only $10.3 million of local food products directly to consumers in 2007, the most recent data available from the United States Department of Agriculture. That's up from $7.6 million of food sold directly to local consumers in 2002 out of more than $2 billion of total food sales that year by such farmers, USDA said.

Pfitzer said farm-to-consumer sales are growing steadily, even though they still comprise a low percentage of total food sales.

The Chattanooga Market, a Sunday general market with an extensive farm and food section, sold $850,000 of farm food last year, more than 40 percent of total sales.

"One farmer came up to me and gave me a hug at the end of the market and told me they had done more business in one day at that market than they ever had done in their farm's history," said Paul Smith, the market's general manager.

About 40 farmers sell at the market, which draws between 7,000 and 10,000 shoppers every week, according to Smith.

Dollars those shoppers spend do more to help the community than other purchases, said Jasia Steinmetz, a sustainable food system expert with the University of Wisconsin and author of a recent book on buying local food. That money equates to a reinvestment in the local economy, helping to support farmers and grow local business.

"The power of where they purchase is phenomenal," she said. "Communities like supporting their own people. There's something about the relationship between the consumer and the farmer."

Padgett Arnold, manager of the Main Street Farmers Market, said her Wednesday market started with just a few vendors last year. It has filled up with 28 local food producers and soon will expand. About 20 vendors show up weekly and each does from $250 to $300 of business.

Arnold, a local farmer for the past 12 years, sells some of her own goods at the market, but said there are too few customers to come close to supporting a farm.

"I try to get as much retail sales as I can first, but I know I'll have to wholesale," Arnold said. "You just have to tap into as many markets as you can to piece it all together."

With at least 15 different farmers markets in the area, consumers are given plenty of options on where to shop. That variety contributes to local farmers needing to find other means of making money.

"The markets kind of cannibalize themselves," said Thomas O'Neal, owner of the 14-year-old Signal Mountain Farm. "Chattanooga's a real small town. There needs to be a few small markets, and then build on those markets."

O'Neal said it's sometimes barely worth the time spent packing up goods, driving to market, setting up a stand and waiting around for customers when low volume yields only a couple hundred bucks. Were there fewer, stronger markets, O'Neal imagines farmers could do roughly the same amount of business without having to run across town sitting at different markets every day.

Signal Mountain Farm far outproduces what it can sell locally, and O'Neal sends a lot of his food to farmers markets, Whole Foods Market stores and restaurants in the Atlanta area.

Lack of demand doesn't force him to ship his stuff. According to the Ochs Center report, the Chattanooga area consumed more than $600 million of fruits and vegetables in 2005, only about $25 million of which was grown locally. Only 2 percent of the total food purchased was produced within 100 miles of the city.

"The demand needs to build a lot more, for sure, but it has gotten a lot better over the years," O'Neal said.

Demand has improved so much that he plans to expand his Chattanooga business.

Sharing the harvest

Community supported agriculture is a process where residents sign up to pay a weekly fee, $32 for the 25-week growing season at Signal Mountain Farm, for a weekly share of the harvest. It's one of the most profitable ways for small farmers to sell food, and accounts for about a third of Signal Mountain Farm's sales.

In 2012, O'Neal plans to stop wholesaling his crop to Whole Foods and instead focus on growing his 120-member CSA to 200.

"The CSA is your bread and butter," Arnold said. "That's your baseline, your foundation for your whole market."

Local food, national movement

Whether it's through CSAs or farmers markets, the buy-local movement has been gaining ground nationally.

"It's a trend that's both deep and broad," said Anthony Flaccavento, a food expert with the Business Alliance for Local Living Economics. "It's sweeping. It's covering much of the nation."

Flaccavento dismisses those who call the growth a fad, noting that the buy-local movement has grown steadily for the past 16 years.

Back in 1995 there were about 1,700 farmers markets across the country. Today that number has nearly quadrupled to 7,100.

Farmers market national sales surpassed $1 billion in 2005, and the number of markets has more than doubled since then, according to Flaccavento. He wouldn't be surprised if total sales this year were more than $2 billion.

Add to that roughly 4,500 CSAs, and local food's economic effects grow even larger.

Chattanooga Challenges

But in Chattanooga, small farms struggle to exist between the too-low demand of direct retail sales and the insatiable demand of grocery stores, restaurants and other wholesale buyers.

Local Bi-Lo grocery stores try to source local produce, but manage to bring in only about 11 produce items from area farms.

"It is challenging for us. A lot of small growers don't have access to a lot of the things the large farms have," said Bob Denomme, director of produce and floral for Bi-Lo. "Customers demand good, solid product and what you get with a lot of local farmers is inconsistencies with a lot of sizing."

Small local farms can't operate the economies of scale that factory farmers do. It's easy for big farms to send the runt and bruised vegetables to be frozen, canned or used in other products, saving the prettiest for the retailers. When a farm is too small to meet demand, that makes providing a visually appealing supply harder.

Add to that insurance liabilities, and dealing with grocers gets more difficult. Before they'll deal with farms, Bi-Lo requires farmers to have a $1 million policy in case tainted food is sold. Small farmers just can't cover that.

"If you're between small and really big, it's hard to do business," O'Neal said.

Denomme said there's still plenty of big business demand for small-farm produce. The small-farm produce tends to cost a bit more, but customers appreciate the freshness and flavor of the food and like knowing they're supporting the community, he said.

Local Whole Foods subsidiary Greenlife also buys local when it can, despite the generally higher price point. But Susan Baker, grocery store spokeswoman, said Greenlife faces problems similar to Bi-Lo when dealing with small farmers.

"We try to offer them flexible distribution because we know it's a struggle for them," she said. "We sell on such a large scale that sometimes it's hard for local producers. It's not us not wanting to buy, it's them not having enough."

Flaccavento said it's a national dilemma.

"The trend on the ground is for a lot of unmet demand," he said. "If you go beyond farmers markets and look at the college and university market, the public school market and the grocery market particularly, the demand is enormous."

Though farmers markets are on the rise, Flaccavento said meeting that wholesale demand is the future for locally grown food. He expects small farmers to band together and build up enough collective power to carve themselves a place in the markets consumers are used to shopping.

As farmers work to expand their markets, they can at least count on dedicated local eaters such as Rhiannon Maynard.

She shopped the Main Street Market on Wednesday for butternut squash, mushrooms and other vegetables, and said she buys about 40 percent of her produce from the farm stands. She said she's spoiled by local farms' freshness and variety.

"I don't even buy tomatoes from the grocery store any more," she said.

And interacting with farmers is an experience the grocery stores can't hope to emulate.

"It's nice to be able to build these relationships," she said. "Out here, it's a bunch of friends."